In ITA No.1273/Del/2023 -ITAT- Institutions managed by trusts need not have separate PAN or file separate tax returns: ITAT (Delhi)
Members Chandra Mohan Garg (Judicial) & Pradip Kumar Kedia (Accountant) [18-07-2023]

Read Order: B.N. Public School v. The ACIT (Exemption) Chandigarh    

Chahat Varma

New Delhi, August 23, 2023: The Delhi bench of the Income Tax Appellate Tribunal has provided relief to B.N. Public School (appellant), by asserting that institutions owned and managed by societies or trusts are not required to possess individual PAN numbers or submit separate income tax returns.

The present case revolved around the appellant's argument against the assessments made by both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)]. The appellant contested the characterization of a cash deposit of Rs. 37,85,000 during the demonetization period in their bank accounts with Bank of Baroda and Syndicate Bank. Both the AO and CIT(A) considered this deposit as unaccounted income under Section 68 of the Income Tax Act, treating it as an unexplained cash credit.

The coram of Chandra Mohan Garg (Judicial) and Pradip Kumar Kedia (Accountant) observed that the appellant was operated and managed by M/s Garhwal Sabha. All financial transactions of the appellant were recorded in the financial statements of M/s Garhwal Sabha, as the appellant was under the administration and control of the said trust.

The bench stated that when an institution was owned and operated by a society or trust, it was not necessary for each institution to have a separate PAN number or file a distinct income tax return. This was especially applicable when the receipts of the institution were managed and incorporated within the income and expenditure account of the controlling entity, society, or trust.

The bench strongly disagreed with the conclusions reached by the authorities. It noted that the factual scenario clearly demonstrated that the appellant had effectively proven that the cash deposits made into its bank account were actually the collected fees from its students. This amount had been accounted for in the income and expenditure account of the controlling society, M/s. Garhwal Sabha. Given this evidence, the bench found that there was no need for any addition to be made in the appellant's assessment.Top of Form

In light of this, the Tribunal allowed the appellant's grounds and directed AO to delete the addition made to the appellant's income.